Press Release
April 3, 2013


The blame for widespread oil smuggling in the country that costs the government P30 billion in lost revenues every year should fall squarely on the shoulders of the Bureau of Customs (BoC), underlining the need to overhaul the agency, Sen. Chiz Escudero said.

"The Lateral Attrition Law mandates penalties on government personnel who fail to perform their duties. The unabated smuggling of oil products and other commodities indicates a massive failure of the BoC requiring top to bottom changes to be effected within the agency," Escudero said.

Petron Corp. chairman Ramon Ang has alleged that one in every three liters of oil products that is shipped into the country is smuggled, and puts government revenue losses at about P30 billion a year.

Escudero said it would not be a surprise that the same equation applies to other products that enters the country.

The country's steel industry has also complained about the alleged unabated entry of smuggled steel products.

Last year, the Philippine Iron and Steel Institute (PISI) and its member-industry associations said the industry was "now starting to lose hope of getting a level playing field as local manufacturers are still not seeing any change in the unhampered smuggling of steel products."

PISI also said the Philippine Galvanized Iron Wire Manufacturers Association Inc. (PGIWMAI) had sent "voluminous letters" to Customs Commissioner Rozzano Rufino Biazon asking the bureau to put a stop to steel smuggling in the country.

Escudero said the only possible answer to the questions on the resilience of smuggling syndicates is that smuggling is mostly done in collusion with some Customs insiders.

For its part, Pilipinas Shell Petroleum Corp., the country's second biggest oil company, confirmed oil smuggling in the country. Its country manager, Edgard Chua, said oil smuggling should be considered plunder because of the damage it causes to the economy.

"Identifying smuggled products does not require sophistication since products being sold far below the average price in the market are probably smuggled. My question to the Customs bureau is, why can't it use this simple rule in investigating reports of smuggling?," Escudero said.

He said the government should immediately file charges against errant Customs officials and personnel, as well as against members of smuggling syndicates amid Presidential spokesman Edwin Lacierda's claim that the government already knows the identity of big-time smugglers in the country.

He also urged the government to coordinate with private sector groups and individuals who had undertaken studies on the extent of smuggling activities in the country.

The reelectionist senator said the government should read the assessment made by University of the Philippines (UP) economist Ben Diokno on the impact of smuggling on the economy.

Diokno had said that the extent of smuggling in the country can be seen from the 6.6 percent growth rate of the local economy last year despite the low 2.6 percent growth in the country's imports which he saw as a paradox. He described smuggling as the elephant in the room that state statisticians missed in coming out with the conflicting economic figures.

"Smuggling not only deprives the government of revenues but also annihilates local industries that in turn forces local manufacturers to close shop and lay off workers, adding to the unemployment burden," Escudero said.

Factories that generate the most number of jobs for poor Filipinos are the main victims of widespread smuggling, according to Escudero.

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